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Case over racist emails at Lotus Bank will head to trial, judge rules

Oakland County Circuit Court Judge Denise Langford Morris ruled Monday that the lawsuit against Novi-based Lotus Bank over racist emails by two bank executives can proceed to trial.

A trial date is scheduled to be set at a hearing on June 9.

Previously, attorneys for both the plaintiffs and the defendants had asked for summary judgment, which Morris ruled against.

“The court finds that the defendants are not entitled to summary disposition because there are genuine issues of material fact regarding whether plaintiffs suffered discrimination and/or been denied full and equal enjoyment of goods and services on the basis of race or national origin,” Morris wrote. “The court finds that there is a genuine issue of material fact regarding the issue of damages suffered by plaintiffs.”

Both sides had asked for summary judgment on April 16.

On April 30, Morris had postponed the trial, which had been scheduled to start May 27, and urged the attorneys to meet with retired Wayne County Circuit Court Judge James Rashid to facilitate a settlement, but there has been no word on that front.

Patrick McCarthy, of the Royal Oak law firm of Howard & HowardAttorneys PLLC, represents the bank and its holding company, Lotus Bancorp Inc.

Elizabeth Thomson of the Bloomfield Hills law firm of Hertz Schram PC, is the lead plaintiffs’ attorney.

The case, which was filed in March 2013, claims racist behavior by the executives violated the state’s Elliott-Larsen Civil Rights Act of 1976 and led, at least in part, to troubles Thomson’s clients had in a dispute over a commercial loan.

The lawsuit was filed on behalf of Jasit Takhar and Anil Gupta. Through their Jackson-based firm, Four Pointe Investments LLC, Takhar and Gupta got a mortgage of nearly $1.5 million from Lotus in 2008 to buy a Travelodge motel in Jackson, but later had trouble making payments.

The case is noteworthy because of allegations of racism by executives of a bank founded in 2007 to serve the needs of the local Asian Indian business community. Most of those who invested in the bank were of Indian descent and most of its board members are Indian.

At the heart of the lawsuit are numerous emails, including:

On May 24, 2010, Bauer referred to members of the board of the bank as “chimps.”

On June 19, 2010, someone sent Bauer an email offering free tickets to a concert by an Indian singer if he wanted some for his customers. Bauer responded: “Only interested if someone is going to detonate an incendiary device. If so, I will get tics (sic) for all of them.”

On July 9, 2010, Bauer, who was then acting as interim CEO as well as CFO, wrote to a friend: “We are close to hiring a permanent replacement, which can’t happen too quickly for me. I just want my job back, and someone else can deal with all these Indians. Working with them really is like herding cats, and I hate cats! … I will leave you with this sage advice from General Custer and most Pakistanis: The only good Indian is a dead Indian.”

The Lotus board found out about the emails more than a year before the lawsuit was filed. The executives’ pay was cut and they underwent sensitivity training.

Last June, the American Banking Association’s ABA Banking Journal ranked Lotus No. 14 of more than 1,200 banks in the U.S. with assets of less than $100 million, based on several metrics, including return on equity, noninterest income growth and ratio of equity to assets.

BauerFinancial Inc., a Fort Lauderdale, Fla.-based rating service that ranks banks and credit unions, has consistently given Lotus its top rating of five stars.